Sections 81 to 83 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Sections 81 to 83 deal with the money consequences of an inquiry, inspection or audit. Section 81 lets the Central Registrar apportion the costs of an inquiry or inspection among the society, those who asked for it and officers and members. Section 82 says how the costs are recovered. Section 83 lets him inquire into the conduct of a person who made a wrongful payment, caused a deficiency by breach of trust or wilful negligence, or misappropriated property, and order that person to repay, restore or pay compensation. None of the three was amended in 2023. They are stated here as per the Ministry of Cooperation copy of the Act read with the Multi-State Co-operative Societies (Amendment) Act, 2023.
After an inquiry under section 78 or an inspection under section 79, the Central Registrar may apportion the costs between the society, the members or creditors who demanded it, and officers, former officers, members and past members, but only after a reasonable opportunity of being heard and with reasons in writing (s.81). Costs are recovered through a magistrate as if a fine (s.82). Under section 83 he may inquire into the conduct of an officer or other person within two years (up to six years in a case of fraud or concealment) and, after a hearing, order repayment or restoration with interest, or contribution, costs or compensation as is just and equitable.
Section 81: apportioning the costs
"Where an inquiry is held under section 78 or an inspection is made under section 79, the Central Registrar may apportion the costs, or such part of the costs, as he may think fit, between the multi-state cooperative society, the members or creditors demanding an inquiry or inspection, and the officers or former officers and the members or past members of that society".
| Who may be made to bear costs | Basis |
|---|---|
| The society | The Central Registrar thinks fit |
| Members or creditors who demanded the inquiry or inspection | Same |
| Officers or former officers | Same |
| Members or past members of the society | Same |
The power is wide: the Central Registrar may apportion "such part of the costs, as he may think fit". It applies to inquiries under section 78 and inspections under section 79. It does not mention an inspection under section 80, nor a special audit under section 77, whose expenses are dealt with in section 77(7); see our note on special audit directed by the Central Government. A person facing an apportionment order can take advice from our legal dispute resolution team on the hearing and the reasons.
The two safeguards
- "no order of apportionment of the costs shall be made under this section unless the society or the person liable to pay the costs thereunder has had a reasonable opportunity of being heard"; and
- "the Central Registrar shall state in writing under his own hand the grounds on which the costs are apportioned."
The second is notable: the grounds must be in writing, "under his own hand". An order without a hearing or without written grounds does not meet the section as printed.
The inquiry and inspection provisions themselves are covered in our notes on inquiry by the Central Registrar and inspection of societies.
Section 82: recovery of costs
"Any sum awarded by way of costs under section 81 may be recovered, on application to a magistrate having jurisdiction in the place where the person, from whom the money is claimable, actually and voluntarily resides or carries on business, and such magistrate shall recover the same as if it were a fine imposed by himself."
Two points. The application goes to the magistrate who has jurisdiction where the person "actually and voluntarily resides or carries on business", so the place is fixed by the person liable. And the magistrate recovers the sum "as if it were a fine imposed by himself", so it is recovered by the machinery used for fines. The Act does not describe that machinery here. The section does not say who makes the application; the natural reading is the person to whom the costs were awarded, but we do not add to the text.
Section 83: repayment and related orders
Sub-section (1): when an inquiry can be started
Section 83(1) applies "if in the course of an audit, inquiry, inspection or the winding up" of a society it is found that any person "who is or was entrusted with the organisation or management of such society or who is or has at any time been an officer or an employee of the society" has:
- made any payment contrary to the Act or the bye-laws; or
- caused any deficiency in the assets of the society by breach of trust or wilful negligence; or
- misappropriated or fraudulently retained any money or other property belonging to the society.
The Central Registrar "may, of his own motion or on the application of the board, liquidator or any creditor inquire himself or direct any person authorised by him, by an order in writing in this behalf, to inquire into the conduct of such person within a period of two years from the date of the report of the audit, inspection or inquiry or the date of the order of winding up, as the case may be".
The time limit and its extension
The proviso: where the Central Registrar "is satisfied that such inquiry could not be commenced during the period of two years aforesaid on account of fraud or concealment of facts, he may make or direct the inquiry to be made within such period not exceeding six years from the date of the report of the audit, inspection or inquiry or the date of the order of winding up, as he thinks fit."
| Situation | Period for the inquiry |
|---|---|
| General rule | Two years from the date of the report or of the winding up order |
| Where fraud or concealment prevented a start within two years | Such period not exceeding six years from the same date, as he thinks fit |
The inquiry can start on his own motion or on the application of the board, a liquidator or any creditor. A member is not named among those who may apply, although the Central Registrar may act on his own motion.
Sub-section (2): the order
"Where an inquiry is made under sub-section (1), the Central Registrar may, after giving the person concerned a reasonable opportunity of being heard, make an order requiring him to repay to restore the money or property or any part thereof, with interest at such rate, or to pay contribution and costs or compensation to such extent, as the Central Registrar may consider just and equitable."
The words "repay to restore" are printed so, apparently for "repay or restore"; we quote them as printed. The order may require repayment or restoration of the money or property or any part of it, with interest at such rate as he considers just, or payment of contribution and costs or compensation to the extent he considers just and equitable. The Act does not fix the rate. The hearing is required before the order is made. The Act does not say in these sections how an order under section 83 is executed; execution of decisions and orders is dealt with in Chapter XI.
A practical example
An inspection of Rangoli Multi-State Co-operative Society finds that a former Chief Executive made loans to a relative contrary to the bye-laws, causing a deficiency in the assets. Within two years of the date of the inspection report, the board applies to the Central Registrar, who directs an inquiry into the former officer's conduct. After giving him a reasonable opportunity of being heard, the Central Registrar orders him to repay the money with interest at a rate he considers just. In a separate matter, the Central Registrar apportions the costs of an inquiry among the society and two officers. He hears them first and records his grounds in writing under his own hand.
What the 2023 Amendment Act changed
| Provision | Before | After |
|---|---|---|
| ss.81, 82, 83 | As printed above | Unchanged |
The 2023 Amendment Act is Act 11 of 2023 and came into force on 3 August 2023 by notification S.O. 3493(E). The principal Act came into force by notification, date not in the source. The 2023 Act did change the offences section (section 104), which has its own penalties for some of the same conduct; see our note on offences and penalties.
Need help with a repayment or costs order?
An officer or former officer who has received a notice under these sections, or a board that wants to apply under section 83, should check the dates, the findings and the hearing record. Our legal dispute resolution team can help you prepare the application or the reply.
Key takeaways
- The Central Registrar may apportion the costs of an inquiry under section 78 or an inspection under section 79 as he thinks fit, after a hearing and with written grounds.
- Costs are recovered through a magistrate as if they were a fine.
- Section 83 lets him inquire into an officer's wrongful payment, deficiency caused by breach of trust or wilful negligence, or misappropriation, within two years, extendable to six years for fraud or concealment.
- After a hearing he may order repayment or restoration with interest, or contribution, costs or compensation.
Read next
- Inquiry by the Central Registrar (section 78)
- Inspection of societies and of books of indebted societies (sections 79 and 80)
- Reference of disputes to arbitration (section 84)
- Multi-State Co-operative Societies Act, 2002: complete guide
Disclaimer: Based on the Ministry of Cooperation copy of the Multi-State Co-operative Societies Act, 2002 read with the Multi-State Co-operative Societies (Amendment) Act, 2023 (in force from 3 August 2023), as consulted on 2 October 2026. The Multi-State Co-operative Societies Rules, 2002 as amended, later notifications and later amendments are not covered and should be checked. This article is general information, not legal advice; check the official text before acting.